WASHINGTON
-- One reason Washington optimists say President Obama and congressional
leaders will cut a deal to avoid the "fiscal cliff" at the end of the
year is confidence that despite the public disagreements, there are
private negotiations moving along behind closed doors.

Don't bet
on it, Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday.
"Frankly, I thought we would be accomplishing more in the real talks
that are going on privately, but I can tell you - being aware of those -
that there's nothing going on privately that's not going on publicly,"
he said. "We've wasted an enormous amount of time here, sparring back
and forth in public. And it strikes me it's a good time to get serious
about the proposals."

The two proposals on the table are dueling
initial offers by Obama and House Speaker John Boehner, R-Ohio, to
reduce the deficit by about $4 trillion over 10 years by heading down
two different fiscal paths.

A
deal is necessary to avoid the expiration of all the George W. Bush-era
tax cuts Dec. 31 and the triggering on Jan. 2 of painful
across-the-board spending cuts amounting to $1.2 trillion over 10 years.
The combined effect of the two without any action by Washington
threatens to throw the economy back into a recession.

The
president's plan relies more on tax increases for earners who make more
than $250,000 a year and fewer spending cuts, as well as requests for
more stimulus money and permanent authority to increase the U.S. debt
limit without congressional oversight. Republicans want to cut more
spending, particularly on entitlement programs such as Medicare, and
leave tax rates alone but raise revenue by overhauling the tax code and
enacting changes such as raising the eligibility age for Medicare.

Outside
advocates fanned the flame of optimism Tuesday at a conference hosted
by Fix the Debt, a bipartisan coalition of business and Washington
interests that advocates for deficit reduction. Somewhere in the middle
of those two proposals is a middle ground, they said. "I think everybody
knows that they just don't want to take the first step and admit it,"
said former senator Bob Packwood, R-Ore., who helped draft the last
major overhaul of the U.S. tax code in 1986.

Packwood said he saw
two ways to reach a deal: for President Obama to bring a coalition
together at Camp David and tell them, "We're not coming out until we're
agreed," or for congressional leaders to quietly and quickly hammer out a
deal and pass it before the end of the year.

Congressional
leaders have resisted suggestions of a Camp David gathering. Boehner
said after the election that any deal "won't happen around a campfire at
Camp David."

Deficit hawks such as former senator Judd Gregg,
R-N.H., a former Budget Committee chairman, are wary a deal will be
reached. "I think there's a clear path to an agreement if the president
and the speaker want to reach one," he said. "On the other hand, it
appears to me views are hardening."

Gregg, who withdrew himself
for consideration as Commerce secretary during Obama's first term, said
he believes the White House is to blame for the impasse.

"My
sense is they ran over the Republican Party and now they want to back up
over them again," he said, "That's basically the view I sense from the
White House. It's not that they're here to do policy, they're here to do
political annihilation."

Gene Sperling, director of the
president's National Economic Council, offered a different view. In a
speech this morning, he said, "Recognition that we must raise rates on
the highest-income Americans stands today as the critical key to
unlocking the door to a bipartisan budget agreement." Republicans
continue to oppose individual rate increases.